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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri JOGINDER SINGH, & Shri G. MANJUNATHA
Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 26/08/2016 of the Ld. First Appellate Authority, Mumbai, confirming the penalty of Rs.1,65,143/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, none was present for the assessee, in spite of issuance of registered notice on 17/10/2017. This appeal was filed by the assessee on 23/12/2016 as is evident from record. The appeal was fixed for 09/11/2017 for which registered AD notice was issued. On 25/01/2018, the assessee requested for adjournment and the appeal was adjourned. Today, at the time of hearing, the assessee neither appeared nor moved any adjournment petition, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of this appeal on the basis of material available on record. On the other hand, the Ld. DR, defended the imposition of penalty by the Ld. Assessing Officer, which M/s. Lion Mercantile Pvt Ltd. was confirmed by the Ld. Commissioner of Income Tax (Appeal).
2.1. We have considered the submissions of Ld. DR and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of trading, manufacturing of textiles/yarn etc, declared total income of Rs.2,75,501/-, which was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny, therefore, notice u/s 143(2) of the Act was issued/served upon the assessee. The assessee was asked to furnish the details. On verification of the balance sheet, it was observed that VAT and CST tax payable was shown at Rs.6,51,165/- and the assessee submitted the challan of Rs.1,16,723/- paid towards MVAT and CST towards outstanding liabilities as on 31/03/2011. As per the Revenue, the assessee could not submit the supporting evidence for balance tax liabilities of Rs.5,34,442/-, the same was disallowed u/s 43B and added to the total income. Further, the assessee paid certain amounts for personal use of the directors of the company and looking into the nature of the business 10% of the expenses, which M/s. Lion Mercantile Pvt Ltd. worked out to Rs.38,647/- were disallowed and added back to the total income of the assessee. The Ld. Assessing Officer initiated penalty proceedings u/s 271(1)(c) for furnishing of inaccurate particulars and concealment of income. The Ld. Assessing Officer levied the penalty of Rs.1,65,143/-.
On appeal, before the Ld. Commissioner of Income Tax (Appeal), the notices of hearing were issued to the assessee but on the appointed date none appeared and thus the Ld. Commissioner of Income Tax (Appeal) confirmed the penalty. The assessee filed appeal before this Tribunal.
3.1. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. DR, if kept in juxtaposition and analyzed, there is no dispute to the fact that the ld. Assessing Officer on perusal of record made the addition.
There is observation in the assessment order that with respect to disallowance of expenses, the assessee admitted
M/s. Lion Mercantile Pvt Ltd. that the payment was made to the directors for personal use, therefore, he made a disallowance at the rate of 10% of each expenses and added to the total income. So far as, payment of VAT and CST tax is concerned, the assessee did not produce any supporting evidence for the tax liability to the tune of Rs.5,34,442/-, which was disallowed u/s 43B and added to the total income.
3.2. In the light of the above observation, we are reproducing hereunder the relevant section 271(1)(C) of the Act for ready reference and analysis:-
Section 271(1)(c) is as under:-
"271(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income." 3.3. A glance at this provision would suggest that in order to be covered under this section firstly, there has to be concealment of the particulars of the income of the assessee and secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of M/s. Lion Mercantile Pvt Ltd. the Revenue either. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account.
Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect.
Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where Hon'ble Apex Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished
M/s. Lion Mercantile Pvt Ltd. inaccurate particulars of such income. Hon'ble Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterated in para 13 that:-
"13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist."
Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed by the assessee because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. [2007(6) SCC 329], Hon'ble Court explained the terms "concealment of income" and "furnishing inaccurate particulars". The Court went on to hold therein that in order to attract the penalty under Section 271(1)(c), mens rea was necessary, as according to M/s. Lion Mercantile Pvt Ltd. the Court, the word "inaccurate" signifies a deliberate act or omission on behalf of the assessee. It went on to hold that Clause (iii) of Section 271(1) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N.
M/s. Lion Mercantile Pvt Ltd. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under Section 276-C of the Act. The basic reason why decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) was overruled by Hon'ble Apex Court in Union of India Vs. Dharamendra Textile Processors (cited supra), was that according to the Court the effect and difference between Section 271(1)(c) and Section 276-C of the Act was lost
M/s. Lion Mercantile Pvt Ltd. sight of in case of Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra). However, it must be pointed out that in Union of India Vs. Dharamendra Textile Processors (cited supra), no fault was found with the reasoning in the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra), where the Court explained the meaning of the terms "conceal" and inaccurate". It was only the ultimate inference in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) to the effect that mens rea was an essential ingredient for the penalty under Section 271(1)(c) that the decision in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. (cited supra) was overruled. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as:-
"not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript".
M/s. Lion Mercantile Pvt Ltd. 3.4 We have already seen the meaning of the word "particulars" in the earlier part of this order. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. So far as, the decision in the case of CIT V/s Zoom Communication P Ltd (supra), is concerned the Hon'ble Apex Court observe so long as the assessee has not concealed any material fact or material information given by him he will not liable for imposition of penalty u/s 271(1)( c ) of the Act, even if the claim made by him is unsustainable in law. The assessee before the Ld. Assessing Officer did not furnished the necessary details with respect to payment towards MVAT and CST.
Even before the Ld. Commissioner of Income Tax (Appeal), the assessee did not appear on 20/01/2016, 02/03/2016 and the sending of notice through speed post was kept on M/s. Lion Mercantile Pvt Ltd. record. Even on providing of final opportunity for 24/08/2016, the assessee did not appear. Before this Tribunal also, as mentioned earlier, the assessee sought adjournment and thereafter sought adjournment for 20/12/2017 and thereafter did not appear. It is the casual approach of the assessee. Considering the totality of facts and in the absence of any supporting evidence, filed at any stage, we find no infirmity in the order of the Ld. Commissioner of Income Tax (Appeal), in confirming the penalty, thus, the appeal of the assessee is dismissed.
Finally, the appeal of the assessee is dismissed.
This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 25/04/2018.